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Wednesday, May 25, 2011

BEIJING, May 24 (Reuters) - Fuji Heavy Industries has agreed in principle to make Subaru vehicles in northeastern China with Chery Automobile, the country's largest independent automaker, two people with knowledge of deal said on Tuesday, marking the latest foreign manufacturing tie-up in the world's biggest auto market.

The Chery deal, if it goes ahead, would give the Japanese automaker a foothold in China, joining the ranks of General Motors and Volkswagen , which had already carved up a major chunk of market where vehicle sales had topped 18 million in 2010. "Chery and Fuji have agreed on the major terms and conditions of making Subarus in the city of Dalian and are now communicating with Chinese regulators to seek their endorsement," one person briefed on the matter told Reuters.

The terms and conditions were similar with what had been previously reported, the person said, declining to elaborate.

The Nikkei business daily reported in late 2010 that the two companies were in advanced talks to build a 30 billion yen ($366 million) China plant, with initial annual capacity of 50,000 units, rising to 150,000 eventually.

New auto manufacturing ventures in China need to be approved by government bodies, including the top economic planner, the National Development and Reform Commission, and the Ministry of Industry and Information Technology, which oversees major industry policies.
Another person close to the companies told Reuters that Fuji Heavy was still occupied with recovery efforts after the devastating March 11 earthquake and tsunami, contributing to a postponement of the announcement of its China tie.
Like all the other Japanese automakers, Fuji Heavy suffered from the disaster. Disruption to the supply chain had snapped its sales momentum, causing a loss of some 15,000 units in car sales in the few weeks remaining in the business year that ended on March 31. A Fuji Heavy spokesman said the company had no further comment after admitting late last year that Chery was among its potential partners in China.
Chery spokesman Jin Yibo said he had no information on the deal.
A formal announcement of the deal is expected in the coming months. It will make Chery the latest Chinese car maker to have a foreign partner, joining bigger auto groups SAIC Motor Corp , Dongfeng Motor Group , Chongqing Changan Automobile among others.
CHINA TIES China, which eclipsed the United States as the world's top auto seller in 2009, is too important to miss for most industry players, including top Japanese brands Toyota Motor , Nissan Motor and Honda Motor which formed their local alliances years ago.
Fuji Heavy, has been seeking a tie in China, where only imported Subaru models, such as Legacy, Forester, Impreza and Tribeca are offered via select agents, including Pangda Automobile Trade Co , China's largest publicly traded auto dealer. The smallest Japanese automaker had previously approached a number of Chinese automakers for a possible tie, including SAIC, a long-time partner of GM and Volkswagen, industry sources said.
Chery Auto, best known for its hot-selling compact car QQ, had explored opportunities to export Chinese-made small cars to developed markets under the Chrysler badge.
But the deal was called off after Chrysler, now controlled by Fiat , reached a similar pact with Nissan Motor . Chrysler's bankruptcy amid of a steep industry downturn in North America was also cited as a reason. In 2010, Chery sold 682,058 vehicles, up 36.3 percent year-on-year, outpacing a 33.2 percent gain in China's car market as well as Warren Buffett-backed BYD , which sold 519,806 cars, up 15.5 percent.

Geely Automobile , whose parent owns Volvo Cars, sold 415,286 cars last year, up 27.1 percent. Chery, which started selling cars overseas in 2002, is now China's biggest auto exporter with year-to-date shipments exceeding 500,000 units. It operates 16 assembly plants overseas, including a $400 million facility in Brazil that will eventually be capable of making 150,000 cars per year.
In 2011, Chery aims to ship 120,000 cars overseas, mostly to developing markets in Southeast Asia, the Middle East and South America, up over 30 percent from 2010.

Wednesday, May 11, 2011

All-wheel drive is to North End Subaru's brand identity what cheesecake is to Junior's. And that has a lot to do with why the brand has been so strong, traditionally, in snow states. But in recent years, Subaru has made inroads in other regions as it has focused as much on cars on the Legacy platform as on its core Forester and Outback crossovers for which the brand has been known.

Now the Cherry Hill, N.J. automaker is making its symmetrical all-wheel drive underpinnings central to a humorous new campaign that makes light of nature's vicissitudes, or at least the TV weather announcers who bring us the predictions.

The campaign, "The World's Worst Weatherman," has the central idea that you can't count on predictions, but at least you'll be able to get around if you have a Subaru. Via AOR Minneapolis-based Carmichael Lynch, it includes TV, the home page at Subaru.com, Facebook, mobile applications and YouTube.

The ads feature a borderline incompetent weatherman, reminiscent of the Ted Baxter character on "The Mary Tyler Moore" show of the '70s -- who can't even get his geography correct, much less talk turkey about weather. In one spot, he starts to talk about weather in Washington, "our nation's capital," except he's pointing to the state. He mispronounces Boise but is obviously proud that he knows the city is in Idaho. In another video, he has absolutely no idea what the temperature numbers mean on the weather map, and the newscasters roll their eyes.

There are also Subaru-produced videos at subaru.com/weather that position Subaru against Toyota, Ford, Nissan and Honda for harsh-weather handling. The site also has games: "Conversation Starters," offering opening lines having to do with other things than the weather; "Time Wasted," a calculator for how much time you spend worrying about the weather; and "Weather Odds" that works out the probability of a person encountering inclement weather in their current location.

Alan Bethke, director of marketing at Subaru, says the campaign has a role in expanding the brand beyond the snowbelt, which has been Subaru's traditional stronghold.

"It's about getting people to understand what the Symmetrical AWD System can do for them, regardless of where they live -- not just in snow and ice. It's good for any road condition. Even for a dry road, it enhances the way the vehicle handles." He says that the brand, which has had three record sales years, recession notwithstanding, has also seen its share grow in the southern states.

Melissa Schoenke, account director at Carmichael Lynch, says the campaign includes five national TV ads that are also available for dealers. "There are also ads more appropriate to certain parts of the country," she says, adding that the creative will reflect the season. "Right now there's an emphasis on rain." Rather than a one- or two-month effort, the campaign will be extended and reflect the changing seasons, per Bethke. "We see it as something long-term; with fall and winter coming into play we see it as something with a long shelf life."

Thursday, May 5, 2011

Buyers hearing that summer vehicle shortages are occurring earlier than they had planned, are visiting dealers to get the cars they want. April sales, which where reported last Monday, are expected to be up 19 percent from last year. Dealers say the increase is at least partly due to anxious customers.

The Japan earthquake is on peoples’ minds, said Adam Skolnick, general manager at Toyota Scion Watertown in Massachusetts. “There is more of a sense of urgency because they don’t want to be left without a vehicle,’’ he said. The March 11 quake devastated Japanese suppliers and shut down production at automakers for weeks. Analysts estimate production has fallen by about 500,000 vehicles and will continue to grow.

Toyota will not return to a regular production schedule in Japan until November at the earliest. Although Japanese automakers are the hardest hit, Ford, General Motors, and Chrysler have all curtailed production.
“As inventories rapidly deteriorate, April could be the last month that we’ll see strong sales numbers until late summer or early fall,’’ said Jessica Caldwell, an Edmunds.com senior analyst.

Yesterday, Honda warned dealers that the 2012 Civic and other models will be in short supply this summer. It also pushed back the fall launch of the CR-V small SUV by at least a month.

The primary impact will be on brands and parts manufactured solely in Japan. Small cars such as the Honda Fit and Toyota Yaris and Subaru Impreza could be in short supply, said Jesse Toprak, vice president at TrueCar.com. “Recovery from this crisis is difficult and constantly evolving … ’’ John Mendel, Honda’s US executive vice president, told US dealers in a letter.

The crisis is beginning to translate into a shortage of most cars and trucks on US dealers’ lots. Prices are inching up on some brands and models, including Mazda, Toyota, and Subaru. For now, there is in many cases, less than a two-month inventory of many models.

In late September, thousands of bicyclists made their treks in southern New Jersey to help raise money for the National Multiple Sclerosis Society. Subaru has supported this MS 150 ride for more than 12 years.

Named official vehicle of the MS 150, Subaru provided:

Twelve vehicles for the organization’s use

Teams of volunteers

More than 20 employees participated in the ride as a bike team

Approximately 60 employee volunteers helped at rest stops, which were stocked with fruit, snacks, and beverages